I guess I got on a bit of a rant on the concept of Chutzpah this week, so I will leave you with one more post on some of the things in my life that I view as chutzpah that I run into in the financial world of today:

Chutzpah is the way to go!

Bank Fees: An institution that used to simply make money by loaning your money to other folks and doing business in the greedy area between loan rates and savings rates, now charges over $10 a month for the privilege to put your money in their bank. You have heard my rants about Free Banking before, but the banking racket has a corner on chutzpah, that is for sure.

To say gas prices in Canada are set in Canada by the free market? To tell us that gas sitting in holding tanks at the local gas station has gone up in price, due to International Shortages, is Chutzpah.

Financial Bail Outs in the U.S.: To have created the entire credit crisis via your own foolish (if not illegal) practices, and then going hat in hand to the government asking for Trillions of dollars to bail you out is chutzpah. You lose consumers money, through flawed methodologies, and then ask for more money from that consumer (through their taxes) to not lose more money? Staggering. (Remember 2008?)

Anybody else wishing to chime in with their own private financial chutzpah examples, please feel free to comment!

Chutzpah?

For those of you who still don’t get the concept of chutzpah the best explanation I can find is from Leo Rostein (author of the Joys of Yiddish ), who stated:

“…that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.”

Compare what the banks generate in “non-interest related” revenue (like bank fees) to their expenses. You will find that most of them LOSE money on that part of their business. That means that without fees, they would lose even more. The only way to make that up would be to increase the spread between borrowing and lending rates.

As for gas, you think it is bad that gas stations raise their price when they can even though the gas in the tank is paid for. Of course the flip side of the coin is true. If your competitor drops their price you have to follow, no matter how much you paid for the fuel. Over the long run, you hope that the times you can increase your price will cover the times you have to sell at a loss. At a retail level, most stations are lucky if they can get 3-4 cents per liter gross margin. That’s before any expenses (other that the cost of the fuel) are paid.